Rail Vikas Nigam Limited's (NSE:RVNL) market cap surged ₹38b last week, state or government who have a lot riding on the company were rewarded

Key Insights

• The considerable ownership by state or government in Rail Vikas Nigam indicates that they collectively have a greater say in management and business strategy
• 73% of the company is held by a single shareholder (India)
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

Every investor in Rail Vikas Nigam Limited (NSE:RVNL) should be aware of the most powerful shareholder groups. We can see that state or government own the lion's share in the company with 73% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, state or government were the biggest beneficiaries of last week’s 4.7% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Rail Vikas Nigam.

Check out our latest analysis for Rail Vikas Nigam

What Does The Institutional Ownership Tell Us About Rail Vikas Nigam?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Rail Vikas Nigam does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Rail Vikas Nigam's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Rail Vikas Nigam. Our data shows that India is the largest shareholder with 73% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. For context, the second largest shareholder holds about 6.0% of the shares outstanding, followed by an ownership of 1.0% by the third-largest shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Rail Vikas Nigam

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our data cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Rail Vikas Nigam. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Rail Vikas Nigam , and understanding them should be part of your investment process.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com